Here's what you should ask yourself. Why would someone who only earns commission to support themselves and their family offer to pay you half of it if they were actually good at what they did and were busy? Understand commission is pre-tax income, and being self employed we pay the highest tax rates to begin with. then there business expenses such as a desk or office cost, the company share of the commission, marketing, advertising, internet, phone etc. The answer is their desperate and who would choose to work with someone desperate? If their willing to give away half their income, how hard to you think they'll fight on your behalf?
My advice is to beware the discount broker. There's a reason they discount and it's not a good one.
They are certainly welcome to practice their business anyway they want, and there are even national franchises that encourage such a business model. True experienced professional Realtors would never do this, as there simply no reason to and trust me I love taking advantage of these poorly trained, inexperienced, weak agents on behalf of my clients.
Buyers rebates are legal here in NYS as well as long as you follow the rules.
(Below my comments is an excerpt from the US DOJ website and I've also posted a link their site)
Here are how the different scenarios would work:
a: If the buyer's agent was also the listing agent (which would present issues as to who they represent) and the broker of record, then the agent would get 100% of the commission.
b: If they are both the listing agent and the buyer's agent (again a conflict of interest) their broker would be getting 50% +/- of both sides of the commission and the agent would get the balance.
c: if they were the broker of record and they are representing the buyer who is buying another broker's listing then usually they would get 50% of the commission
d: (And this is the most common agent situation) The broker of record and the agent split the selling broker's commission (often less or more than 50-50) and the broker and the buyer's agent split the buyer's side (co-broke) of the commission (again could be an uneven spilt)
All commissions are negotiable so it's possible the property was listed with a commission from 0% to whatever so I wouldn't assume the rebate is 1.5% or even .0075% unless you have that in writing.
Please let us know how this all pans out!
From the DOJ:
"May a real estate agent rebate a portion of the agent's commission to the borrower? If so, how should the rebate be listed on the HUD-1?
According to HUD, yes, real estate agents may rebate a portion of the agent's commission to the borrower in a real estate transaction. The rebate must be listed as a credit on page 1 of the HUD-1 in Lines 204-209 and the name of the party giving the credit must be identified.
Real estate agent or broker commission rebates to borrowers do not violate Section 8 of RESPA as long as no part of the commission rebate is tied to a referral of business."
I totally agree with Jed below. I hope you got a good price and all the credits from the seller that you could have recieved. This can add up to a lot more than you may save in the commision credit.
Hopefully your lender will also be OK with this and the Developer of the building / contract that you have signed.
The one thing that needs to be addressed is service. Does receiving a rebate for a buy side transaction decrease the amount of service that the buyer receives? We say "No". I started my firm with the idea that rebates don't discount the level of service or professionalism. We feel that we can help buyers and earn less commission but still deliver a better valued experience. We don't over work our agents and make sure that they have the tools and the time to be the ultimate advocate.
I wish you the best of luck with your purchase. The Madrone by Bosa is a nice community.
Licensed in CA. 01291288
This can be done but those of us that don't buy business believe that we deliver value for our earnings. I know that you think $14,000 is a lot of money but a really good agent, someone who doesn't have to buy clients, can negotiate that and more for you.